Facebook growing, but more roadkill coming?

Eric EldonMay 18, 2007 7:50 AM

Facebook is growing quickly, adding between 100,000 and 150,000 new users per day, the company tells us, with the highest growth rates coming from abroad.

Particularly noteworthy is its traction in Canada, where it has more than 2 million active users, around 11 percent of the site’s total. A remarkable 20 to 25 percent of Toronto’s population is using Facebook, with more than 500,000 users. Ontario even banned the site in governmental workplaces because it was so distracting. Growth rates are several times higher outside the U.S. than in it.

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The break-neck growth shines a spotlight on two challenges possibly at odds with each other. The first is pragmatic: find more ways to monetize, possibly with an eye to go public. The latest example of Facebook’s efforts here is Marketplace, its classified-ads service. The second strategy is more exploratory, but more exciting: provide a user’s “social context,” such as a list of their personal interests, their friends and groups to other sites and applications. This creates an online social ecosystem of sites offering any number of services.

The company has been working towards the latter goal since last August via Platform, its API (application programming interface). However, the launch of Marketplace is in direct competition with anumberofstartupsusing Platform. The danger the company now faces is scaring off companies, especially startups, that are considering it as the way to tap into the site’s ever-expanding user base.

What happens in Facebook… happens everywhere

There was no single factor that led to the “tipping point” in Canada, the company said. This appears to be a snowball effect, which started on US college campuses in 2004. The more people join, the more relevance the site has for non-users.

The U.K. is second behind Canada, in terms of growth, with more than 1 million users. The next most prominent countries are, in order: Norway, Australia, South Africa, Lebanon, Egypt and India. An Egyptian newspaper, for example, says that the site has “caught on in Egypt because it provides more privacy, allowing users to control their settings” so only their friends can see their data.

As we’ve already noted, growth has been happening across demographics. In the US, however, the site is still disproportionately popular among college students, according to Compete. And while Facebook and Myspace are both growing fast around the world, Facebook’s growth rate is faster. Here’s the latest data from Comscore:

Increasingly, the company’s decisions about how to monetize will have ramifications for potential partner sites everywhere.From tipping point to balancing act

Meanwhile, Facebook continues to focus on the “Platform” API as a driver of growth. An ecosystem of sites using this has slowly formed, providing a variety of entertaining pastimes, such as being able to check out cute members of your peer group. Another example could be if Facebook were to incorporate Netflix data into profile pages so that you could see which movies people have rented “to facilitate borrowing.” Interesting: That’d let me borrow a Netflix video from a friend without actually getting it from Netflix :) Other lucrative niches may be found, such as a mash-up of ticket sales for events on Facebook, creating a sort of StubHub (a focused site that did so well that eBay was forced to buy them). However Harjeet Taggar, co-founder of competing classifieds site Boso.com, wonders how many of these areas will bring money: “Once you start getting into niches of niches you’re getting further away from big business.”

Notably, Oodle, a classifieds-ads startup, also integrated its services with Facebook — just a few days before Facebook launched its own Marketplace. Like Marketplace, Oodle enables people to share postings with a friend and to see who else in their group has something available.

Indeed, companies considering building on Platform will need to be reassured by Facebook that it won’t try to wipe them out of business. That’s just one part of the challenge to manage its brand as it grows. One pundit, Donna Bogatin at ZDNet, recently ripped that “Facebook stood for something, once,” an online extension of college campuses “by and for the students.” Now, she said, “it stands for what’s best for Facebook: unlimited demographic diversification and commercialization…” while still clinging to its college-kid image. Its continued success indicates that most people don’t think that, or don’t care. Like Google and MySpace, critics will emerge, but as it keeps offering a useful service, the larger user base stays loyal.

And we’ll be learning more about Platform pretty soon here. Facebook is hosting an event next week officially titled “F8: Facebook Platform Launch.” F8. Get it?

Fate.

[Author Eric Eldon thought he was going to become a professional journalist when he graduated from college two years ago. Instead, he is co-founder of Writewith, a company that makes online word processing work for groups. You can reach him at eric@writewith.com.]